DARMA Capital launches CFTC-regulated Filecoin-based swap

DARMA Capital, a digital assets management firm, announced the launch of Filecoin Asset Use Swap (FAUS) — the first of its kind Filecoin-based swap.

1/ DARMA Capital, a CFTC-registered Commodity Trading Advisor and swap firm, today announced the launch of its Filecoin Asset Use Swap («FAUS»), a product designed to grow the Filecoin Network and the availability of decentralized data storage. Why is this important? pic.twitter.com/gfzYposWpY

— Digital Asset Risk Management Advisors (@DARMACapital) February 14, 2022

DARMA Capital has obtained regulatory approval for the product from the CFTC.

The instrument involves two parties exchanging cash flows generated by two different assets over a defined period.

With FAUS, the firm can lend to clients FIL tokens it holds, worth about $100 million. The instrument eliminates the need for users to purchase the underlying asset, allowing income through the Proof-of-Stake mechanism.

The contract term ranges from 1.5 to 2.5 years. Participation requires compliance with KYC/AML requirements.

In an interview with CoinDesk, DARMA managing partner Andrew Case noted that for a certain category of data-storage providers, the requirement to purchase FIL poses a barrier.

“People are used to Bitcoin mining, where electricity, real estate and equipment are required,” he explained.

Unlike many crypto-lending projects that require collateral of 80–150% of the loan amount, FAUS requires only 5% of that amount to cover the risk of slashing.

“Based on current conditions in the Filecoin network, storage miners earn around 60–80% of tokens,” the company’s calculations showed.

By minimising capital expenditure, FAUS allows space providers to scale up their participation and boost block rewards. The instrument supports the network rather than speculating on FIL, the firm said.

DARMA noted that, thanks to their product, the network could gain greater diversification — about 65% of storage capacity is supplied by participants in China.

The firm expects interest from participants in the United States, Europe and Australia. The first cohort of FAUS participants has expanded network capacity by 600 pebibytes.

In January, the CFTC fined Polymarket’s prediction platform $1.4 million for operating off-exchange binary options trading without proper registration.

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